Cloud ERP

Every innovation spawns its own set of issues. What happens when you have a lot of a good thing like cloud computing? You might get a Franken-cloud as some vendors are calling it.

Basically a Franken-cloud is what happens when you have multiple cloud-based systems that need to share data and run processes in your business. As recently as a few years ago, and there are plenty of legacy situations that fit this description, the same issues would have come from buying multiple best of breed applications and trying to knit them together. Much, if not most, of the overhead in contemporary IT comes from such situations.

It started with accounting. Maybe you had accounting software from one of the big vendors to which you added some special processing apps for your business’ vertical. HR or HCM apps operated off the accounting package too but you decided to buy your personnel apps from a specialist company. It was also responsible for supply chain, product lifecycle management (PLM) and other manufacturing systems. If you did consulting, there were specialized time and accounting apps for that operation too and then if you needed incentive compensation management for the sales force, it meant another app.

I am just getting started but you get the idea. With every additional app someone had to keep the versions in synch with the rev levels of your operating system(s) and database(s) and you might have had issues with the management tools you needed to run this system but different tools to run that system.

We easily forget the complexity of on-premise software when we get to cloud computing because so much of the hardware and OS/DBMS stack is managed by the vendor making it all a wonderful black box for your IT staff. But complexity is beginning to creep into cloud computing too. There are so many cloud apps these days that there’s a thriving business for integrators and integration tools. It also doesn’t help that a provider of hardware, operating system, and database in the sky calls its offering a platform too. These “platforms” give you the same control of the innards of the system that you had when everything was in your data center, but is that good?

The software platform changed all that for the better. If two apps are built to the same software platform standards, it’s almost like they were written together and the integration points are much less severe. But cloud apps based on two different platforms brings the bad old days back pretty fast.

So, Franken-cloud is what some vendors are calling it when you recreate the kind of Byzantine amalgamation of integration in the cloud that you had when your business was strictly on-premise. But the big difference today is that Franken-cloud is optional; you don’t have to do this to yourself.

Avoiding Franken-cloud involves selecting platform first when you go to the market for cloud software and determining to stay true to that platform if at all possible. You might say that vendors have been trying this approach to lock in for a very long time, and you’d have a point. But where old school vendors liked to insist that all of your apps should come directly from their shops, staying true to a platform is simpler. With literally thousands of apps adapted to the standards of one or more platforms, you are free to pull together the best of breed solutions that your business needs.

This approach offers the best chance of avoiding all of those integration points because most vendors today have big ecosystems of partners that have written apps to the standards of their platforms rather than simply trying to integrate them with whatever’s popular. Even if two systems have not been integrated before, developing them to the same platform standards makes integration much easier.

You might say, well I have a mix of systems, some new cloud apps and others that are legacy systems. That‘s a tough situation but it’s anything but hopeless. Surviving Franken-cloud starts with picking a platform, which means finding one with an ecosystem of partner products that will support your business. Then, as you migrate your technology infrastructure to the cloud, stay within the ecosystem. You can still leverage the platforms’ integration capabilities to keep the legacy systems incorporated but over time the objective should be to simplify through leveraging the platform.

Franken-cloud is a manifestation of two things—new cloud technology and old style picking a vendor and figuring out integration later. Thinking about integration first, especially with the plethora of platform solutions available today, will ease the problem and make your business more agile because you’ll be able to change configurations to meet new demands easier.

I don’t know how many old movies there are in which the good guys say, “You’re surrounded, come out with your hands up!” Somehow being surrounded is a bad thing, or at least it was until it became a hot trend in the back office. Let me explain.

Surrounding legacy systems like conventional ERP is proving to be a good idea for a bunch of reasons. Everybody remembers the last ERP implementation wave more than 15 years ago when so many businesses needed to update their software to be compliant with the new century’s dates. Mostly what we remember is the delay, expense, overruns, and how the projects almost cratered some companies. Back then it was everyone’s ambition NOT to become a headline in the business press for a new ERP implementation.

The era left some bruises and although we’re all older and wiser, the scars are deep enough to make seasoned IT people more than a little wary of a rip and replace project for the back office. Can’t blame them. But this reticence and the stasis it imposes have a cost. The now legacy systems are becoming brittle and full of compromises caused by additional coding projects meant to keep the systems in step with their businesses.

One of the most disconcerting phrases I hear these days is, “Our system won’t let us do that” whenever someone proposes a new business process. So at least in some cases legacy systems are preventing businesses from evolving. If only there was a way to evolve while keeping the legacy systems in place, or at least not require a rip and replace, many businesses could get on with some challenging and remunerating work.

Today there is a solution for this dilemma and it employs a surround strategy, maybe you’ve heard of this. A surround strategy puts a new ring of flexible cloud-based ERP around the legacy systems enabling the business to transfer its back office innovation to the new ring while leaving the core system to continue with many functions like consolidating financial data and issuing reports. That means all, or at least most, innovation moves to the cloud allowing processed data and workflow to proceed to the legacy system.

Surround strategies are a practical approach to ERP obsolescence and they’ve been very useful in multiple business cases. For example, many ERP systems are not adapted to subscriptions because they are not built around the concept of recurring revenue and frequent customer-inspired changes. But many cloud ERP systems and specialized subscription billing solutions integrate well together.

Cloud ERP’s saving grace is the platform which can support multiple applications and is preconfigured to work with them. FinancialForce is a case in point. Built on the Salesforce.com platform this cloud ERP app easily integrates more than 2,000 other platform apps so that as a business grows it can have easy access to other front and back office systems that help it complete its mission.

Also platform tools, which include social tools, journey mapping, and point and click app generation for multiple operating systems and devices, enable businesses to make improvements and modifications to platform apps without the risk of losing the improvements with the next upgrade. Thus they can evolve with their businesses.

All this is happening not a moment too soon because businesses and markets are changing focus from transactions, which conventional ERP is good at, to processes. ERP and its data are key components of many business processes but ERP has to integrate well and change frequently to keep up with business change, that’s why a surround strategy with its improved business agility is so important.

The surround strategy might not be right for every business, no solution is, but it opens up a wide new vista for back office workers and managers who are tired of hearing and saying, “Our system won’t let us…”

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Beagle Research Group, LLC is a CRM analyst firm founded in 2004. We perform market research for vendors and advise end users in CRM selection, deployment and use. We also publish a steady stream of analysis on many of the industry’s most popular topics as well as emerging trends. For example, one of our core pursuits is researching emerging companies to understand current innovation trends. This research informs the advice we give our clients and readers.